After Moody’s, will S&P lift India’s ratings today?

Experts are of the view that an upgrade from S&P will be a positive for the bond market and likely reduce interest costs for both the government as well as companies raising funds from abroad

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Mumbai: Coming a week after global credit rating company Moody’s upgrade -- a first in 14 years, expectations are that Standard and Poor’s will also give a favourable outlook on Friday.

Experts are of the view that an upgrade from S&P will be a positive for the bond market and likely reduce interest costs for both the government as well as companies raising funds from abroad.

In October, S&P had said the country needed to improve its fiscal position for a rating upgrade.

“For an upgrade, India would have to address its weak fiscal balance sheet and weak fiscal performance. India has one of the highest general government debt-to-GDP levels (68 per cent) among emerging market sovereigns,” S&P had said.

In May this year, chief economic adviser Arvind Subramanian had slammed the rating agencies for not upgrading India despite clear improvements in economic fundamentals (such as inflation, growth, and current account performance).

Without naming S&P, the CAE had said rating agencies may have ‘poor standards’.

The Narendra Modi-led National Democratic Alliance (NDA) government has rolled out a string of reforms such as goods and services (GST), a new monetary policy framework, measures to check the banking sector’s bad loans ratios, demonetisation, the widely debated Aadhaar biometric system, and the Direct Benefit Transfer system.

Defending its decision to upgrade India’s sovereign rating to Baa2 from the lowest investment grade amid a broader macro-economic slowdown, global rating agency Moody’s has said that the recent reforms carried out by the Modi government will enhance India’s structural credit strength, including its strong growth potential, and improve global competitiveness as well as India’s large and stable financing base for government debt.

On the question of the reason for an upgrade amid India’s current macroeconomic slowdown, Moody’s said, while it has lowered its growth forecast for India to 6.7 per cent in 2017-18 to take into account the recent slowdown, the economy’s growth potential is strong and stronger than most peers.

The upgrade came within weeks of a 30-place improvement in India’s ranking in World Bank’s ease of doing business ranking to 100th rank.

India's credit rating upgrade by Moody's is a reflection of the country's growth story, Niti Aayog vice chairman Rajiv Kumar had said and expressed hope that other global agencies such as S&P and Fitch would follow suit.

After Moody’s, will S&P lift India’s ratings today?Description:Experts are of the view that an upgrade from S&P will be a positive for the bond market and likely reduce interest costs for both the government as well as companies raising funds from abroadTimes Now